Soren Kaplan, Ph.D. answers these and other questions in his new book,Invisible Advantage: How to Create a Culture of Innovation. After reading his book, I had the opportunity to ask him some questions about his research in the area of innovation, disruption, and corporate culture. Soren has been recognized as a Thinkers50 Global Thought Leader. He’s a keynote speaker, a consultant, and an author. You may have read his previous book, Leapfrogging.

What is Missing from Culture Discussions

Organizational culture has been the rage in discussions for quite some time. What have many of these discussions missed?

People have been talking about organizational culture for years. But few discussions on the topic have explicitly linked culture directly to innovation. Even fewer focus on the integrated set of things that leaders can do that directly create a culture of innovation in a truly systematic way.

It’s one thing to create rewards for example. It’s another to look at how rewards, metrics, processes, and storytelling can all be used together to change culture for the better. The problem is that most leaders do things that both support and contradict a culture of innovation all at the same time, like telling people they want innovation but then not giving people time to innovate.

To many executives, culture has become a complex and mysterious topic. Business and leaders have lost sight of the fact that organizational culture is actually pretty simple. Here’s how it works: Employees have experiences in organizations that are influenced by leaders’ conscious and unconscious decisions and behaviors. Experiences shape assumptions about what is both desirable and undesirable behavior. Assumptions, in turn, influence and reinforce behavior. It’s an ongoing cycle. That cycle can be either virtuous or vicious and can lead to innovation or stagnation.

Why Culture is a Sustainable Advantage

Share a little about your thinking of culture as a sustainable competitive advantage.

The first reality in today’s disruptive world is that competitive advantage is temporary. Products, services, and even business models become commodities over time. If organizations do not continually invent and reinvent their competitive advantage, they risk being disrupted into obsolescence. Given all the disruption out there, this fact is the no-brainer.

As a result of the commoditization of just about everything, culture becomes the only sustainable competitive advantage. Culture represents the norms and values that drive behavior. When it’s focused on and reinforces innovation, it becomes the invisible secret sauce that drives employee engagement, business growth, and continuous reinvention.

The bottom line is that the soft stuff is the hardest stuff for competitors to copy. The goal is to create an “invisible competitive advantage,” something I call your “Invisible Advantage.”

Culture can easily stifle innovation when an organization runs on unspoken norms and values that directly run counter to what’s needed for innovation. Innovation requires giving people time and the tools to innovate, supporting trial and error, viewing failure as a learning opportunity, and recognizing and rewarding people for specific innovation-related behavior that you want more of. Culture can either be designed to reinforce these things, or it can be left to its own devices, which might give you a sporadic innovation now than then, but most likely won’t give you sustainable innovation that can be turned into a true “invisible” competitive advantage.

Would you share an example of a company doing it right?

There are a lot of companies doing the right things. Zipcar reinforces its culture of innovation by scheduling “member roundtables” that include about a dozen customers who share their needs, experiences, wishes, and feedback directly with the Zipcar staff, and then roll up their sleeves with employees to come up with and test ideas in real-time. Roundtables are undeniable experiences—it’s hard to disregard customer needs after a face-to-face conversation. These types of direct interactions with customers, that go beyond market research and tie into real product and service innovation, are powerful ways to shift employee mindsets and create the impetus for change focused on delivering value that directly meets customer needs.

Another example is the public television and radio station in San Francisco, KQED, which designed an award specifically to reinforce both small and large innovations that surface throughout the year. The award isn’t about money. KQED designed trophies to recognize their innovators. And they’re not your ordinary trophies. Atop each stand is the letter Q to connect back into the Q in KQED. This subtle branding links the award to the organization and to the other innovation efforts happening there, such as the “Q-vation” team, which is responsible for collecting ideas and promoting KQED’s culture of innovation on an ongoing basis.

The most innovative companies don’t just do one thing focused on innovation; they create an integrated system of activities that all reinforce each other to shape culture.

Words are Powerful

I enjoyed the warning about language because words are more powerful than we realize. Would you share the McCrocker example?

I once conducted an innovation-culture assessment for a major food company. As I interviewed its employees, I kept hearing that certain bad ideas were “McCrockers.” Time and time again, I’d hear people say, “That’s a terrible idea. It’s a McCrocker!” I learned that ten years prior, a food technologist had invented a new cracker and called it a McCrocker. It failed miserably in the market. From then on, whenever people wanted to kill an idea, they just called it a McCrocker! The moment a new idea was symbolically associated with that painful failure, it became that much harder to get support for moving the idea forward. The company culture had adopted the word McCrocker as a symbol of failure and was actively using it to stifle innovation.

Language is a powerful mechanism for shaping culture, and many organizations have their own equivalents of McCrockers. Certain words and statements that show up frequently across companies and organizations can easily kill the creative spirit.

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Culture Tip: Be careful of your language. Some words can kill creative spirit.

You’ve worked with a who’s who list of the biggest companies in many industries. When you first start working with a company, how do you assess its culture? What are you looking for: the facilities, the way people treat you, the leadership team?

Even though culture is somewhat of an amorphous concept, over the last 20 years, I’ve discovered a way to decipher it. I first conduct interviews that focus on how innovation is defined, how it’s measured, and the stories that are told about both innovation successes and failures. I also use a very concrete survey that uncovers and quantifies the most important elements that contribute to a culture of innovation, including leadership behavior, organizational structure, innovation processes, people, metrics, recognition and rewards, and technology.

The goal with all of this is to create a snapshot of what supports and what hinders innovation to make it visible to leadership. Doing this turns culture into a tangible, strategic part of the business, which most executives need in order to make things concrete and actionable.

What are the other benefits of creating a culture of innovation, and can any organization do it?

When I wrote my book, I decided to include the interview guide, survey, and toolkit I use in my work. Yes, I’m making it freely available. My view is that creating a culture of innovation is about much more than creating new products and getting business growth. It’s about giving everyone a voice. It’s about getting everyone engaged in the organization. It’s about quality of life.

And, yes, this applies to any type of organization in any industry from corporations to nonprofits to healthcare to government.

Many of my clients across widely different types of organizations ask me how they can promote risk taking. What they don’t realize is that they’re asking the wrong question. The goal is to eliminate the feeling of risk altogether and replace it with an environment focused on collaboration and learning. That’s what a true culture of innovation does.

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